The assumption of linearity is tested using five statistical tests for the US and the Canadian unemployment rates. An AR(p) model was used to remove any linear structure from the series. Strong evidence in favour of non-linearity was found in the case of Canada. The result for the US is not so clear cut.non-linearity

Theodore Panagiotidis

English

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Testing the assumption of Linearity

http://www.accessecon.com/pubs/EB/2002/Volume3/EB-02C20007A.pdf

Testing the assumption of Linearity

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Research Papers in Economics